I would agree with taking your daughter to see a few competitions and see how she likes them... 
I would also look at how she is when it comes to winning or loosing, basically how is her spotsmanship...

I know a little boy of seven whom I had to pull away from a game of battle ships because he was so excited that he sunk one of his brothers ships... Then his brother sank one of his and he got soooooo upset and angry that there is no way he could continue the game unless he was winning.... So I had to stop that game because lets just say it was not pretty....  I mean it was only battle ships.... 

If you think she can handle loosing and of course winning with out rubbing it in to the other little kiddies ( ) Then she should be fine...   But maybe it would be nice to show her first what competitions are all about... And show her both sides of sport.. The winning and the loosing..> JUST IN CASE....

Has she shown any interest in competing? If not, I'd just hold off. Does she do lots of different sports? If she's keen to go competive, maybe you could give her the choice of just picking one so she dosen't get burnt out.

If she does end up doing lots of competition, in the near or distant future, maybe you could try other activities which aren't competitive, like Girl Guides or something, so she's got a balance.

Libby

I gotta agree with cazza here. Let them have fun while they are enjoying it, at that age there really is no need for them to compete. I mean, we have to compete for so much as we get older (and not just in sport) that just let kids be kids and enjoy the childhood. You only have one childhood. Let them be able to reflect back when they are older and say, yeah it was great growing up. If when she's older and wants to do something competitive, then yeah why not.

I personally would just let her go with what she enjoys and with any sport you have your kids in,. there is always competion,. its only how you teach your child the diffrence between compete and fun helps the child decide if they like it or not..

My son has being playing Soccer since he was 6, and he is 10 now, and as much as he knows that when he goes out there to play, its a team game, and its not about winning as much as they  like too..... 

So let her enjoy it, and soon enough she will tell you what she wants to do,....

take care
love cazza